$20 million is small change for Apple, and it’s probably not all about simple indoor GPS.

The Wall Street Journal is reporting that Apple has bought the “indoor-GPS” company WifiSlam for $20 million. Apple has acknowledged the deal but won’t comment further, but we know that the two-year-old startup has patented technology to enable precise indoor geo-location of a Wi-Fi enabled portable device.

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The system works by using crowd-sourced Wi-Fi fingerprints–essentially the map of which wireless network is visible at what strength from a particular place on the planet–and it’s precise enough to very accurately locate a user in a particular corridor in a large building. This is a very similar trick to the Wi-Fi and GPS techniques that Apple uses to power its iOS location services, including its traffic reports. Apple got into hot water for this a while ago, partly through an error and partly because users don’t understand that it’s thanks to anonymous crowd-sourced location data like this that all our smartphones are actually good at GPS.

Speculation is now abounding that this purchase is a play by Apple to super-power its mapping services by including indoor GPS and maps in its location products. Google has been trying a similar trick, also using wireless fingerprints but in this case recorded deliberately, and Microsoft and Nokia have separately been looking at this system for future use.

But the advantages of precise non-GPS-based systems like this go far beyond simple location indoors–as useful as that is likely to be for navigation and so on. WifiSlam’s system may also be useful in crowded city streets where GPS signals are blocked by buildings, and it will be incredibly useful in locations like shopping malls. Integrated with other iOS systems like Siri, WifiSlam’s tech could let your phone tell you how to get to a particular store in a mall or even a section in a department store. Combined with something like Apple’s Passbook, it could also allow ultraprecise coupon-based advertising. This isn’t futuristic nonsense, by the way: Macy’s indoor GPS iOS app already has a lot of this functionality, in this case provided by indoor location expert firm Meridian.

And if Apple’s future iPhones do include fingerprint systems, then this sort of indoor location precision would create an extremely secure payment system that far surpasses your plastic credit card’s usefulness–because the company would be able to precisely ID the account owner and confirm that the phone is in fact in a particular store paying at a particular cash desk. This security solution is in an existing Apple patent for next-gen ATMs.

There are also plenty of other potential implementations, including buddy finding and indoor augmented reality systems–the sort of tech, in fact, that Apple has been patenting for a long time for its standard GPS solutions.

How much would you like your next smartphone to be able to precisely navigate you indoors, perhaps in an unfamiliar building? Would you use ultratargeted promotional coupons from stores based on your precise location?

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